Cheap PM - Should I Fire Them?

Question

Hello,

I live out of state and need some work done on one of my properties. The property management company is telling me that it would cost $45 to have someone go out and meet the contractor there to give them access each time. It would be at least 3-5 times over the next few months.

Am I wrong to think this is a really cheap move by my property manager? All I need is them to either:

1. Leave a lockbox there for a couple days

2. Go and let the contractor in if the tenants aren’t home

Don’t see how this should cost anything let alone $45. I was recently charged $45 for them to take photos of the water heater I’m having replaced.

The property is in a large neighborhood with plenty of other rental homes... not a far trip by any means

Hello,

I am looking for advice about using a lockbox for a property. I live out of state and need some work done on one of my properties. The property management company is telling me that it would cost about $45 to have someone go out and meet the contractor there to give them access each time. It would be a 3-5 times over the next few months.

Am I wrong to think this is a really cheap move by my property manager? All I need is them to either:

1. Leave a lockbox there for a couple days

2. Go and let the contractor in if the tenants aren’t home

I’m feeling a bit nickel and dimed of late and imagine my tenants do too. Recently, I was charged $45 for asking them to take photos of the water heater I’m having replaced.

Should I fire them and hire someone else? Should I just install my own digital lockbox? Those cost about $150 online. Not sure how safe that would be

Steve Maginnis · Answer

Account Closed, I think the underlying issue is poor communication with/from your PM.  That is the number one reason why Landlord's leave their manager.  If they had better communication with you, the two of you could likely come up with a win/win solution for the contractor situation.  If they had communicated better with the tenant, it could have saved you $90.  I think if you have a conversation with them and spell out your concerns, maybe they will understand that if they do not improve their communication, you will find another management company.  Unfortunately, the "squeaky wheel" theory holds true.  Best of luck.

Steve Maginnis · Answer

Hello Account Closed

I personally do not feel the PM is too far out of line.  I don't feel it is the PM's responsibility to arrange entry for your contractors every time they need to go in.  Just as there likely is no provision for charging this in the management agreement, there conversely likely is no provision stating this is one of their duties.  I do not understand why they could not place a combo lockbox on the property.  For our occupied properties, contractors need to schedule with the tenants to be there.  Tenants need to make themselves available during normal business hours to allow contractors inside.  Or alternatively give us authorization to send a key with the contractors.  Did they say why they can't place a lockbox?  I like to work efficiently, and this is terribly inefficient.  Time is money and I would not want an owner to expect us to drop what we are doing to go let contractors in a property for no compensation.   This also goes for taking a trip to the property to take a photo of the water heater.  Why can't the tenant take a pic and send it to the PM?

I also agree with the work order to replace batteries in the thermostat.  A contractor's time is money too.  Just because you can get a four pack of AAA batteries for $7 does not mean that is what the job should cost.  Most contractors in our area charge a minimum service call fee of $75-90 on top of any service provided, or absorbed if over a certain amount.  Even with no service call fee, there is drive time there, to the store, back to property and back to office.  Truck expenses, insurance, and other overhead they have to account for.  Did they diagnose the system to determine the issue?  Did they have to go to the store to buy new batteries?  If the tenant submitted the work order stating the thermostat is dead, the PM should have asked if the tenant replaced the batteries, and if not, to try that first.  PM's should know what steps they can direct the tenant to take to correct minor issues.  Thermostat batteries should be a tenant expense in my opinion, just like other expendables such as light bulbs, HVAC filters, etc.  I hope this helps explain.  Best of luck.

Drew Sygit · Answer

Have you considered that you might be being cheap and short-sighted as the property owner?

As several above pointed out, time is money.

Your PMC is NOT a servant at your beck and call. Their time is of value. Property management agreements are designed, so that PMC's can actually make money from their time & efforts. Anything NOT covered by the agreement is negotiable and typcially an extra charge. Yet, property owners consistently think EVERYTHING they want should be included.

How many property owners would agree to consistently work extra hours each day and weekends at their day jobs with no additional compensation? Even if you are forced to do it and begrudgingly agree, how well do you then perform while looking for another job?

If you want your PMC to meet the contractor you hired at your property, then you should be expected to be charged for this. If it's a once-in-a great-while occurence, then maybe your PMC might not charge as a favor.

It's no different than when an owner chooses to list their rental property for sale with another real estate broker and then expects the PMC to set up showings with the tenants for this other broker - for FREE. How fair is it to expect the PMC to spend their time for free helping another broker get a commission? We've even had to explain this to other brokers when it happens, as they too, think a PMC should do it for free - until their faulty logic is explained to them.

As also pointed out above, if you had hired the PMC to handle the project and they were charging a markup (which is often sadly, hidden), then their fee should cover incidental issues like contractor access and monitoring.

ACCESS LIABILITY: For those that mentioned just installing a lockbox so the contractor can enter a tenant-occupied home whenever they want - what liability issues do you think you are failing to consider? There's no way as a PMC that we would allow this to happen! If anything goes wrong in the sue happy US of A, the PMC will be included in any lawsuit and at best, has to pay attorney fees to get out of the lawsuit.

Julie Hartman · Answer

Account Closed What you are describing sounds a bit strange. Was any of this outlined in the management agreement? If not, then I would be shopping for a new PM. I can only speak to how we handle such things but I don't think it's customary to charge that much for battery replacement or to charge for anything without prior notification to the owner. We don't like our owners to have unpleasant surprises on their monthly statements.

Theresa Harris · Answer

Is there someone living in the house?  Surely a tenant would just do it.

The ideal situation you described is how it should work-quick troubleshooting with the tenant over the phone for something that could be as simple as changing a battery.  Less work for everyone and saves the PM time.

I'd ask for your tenants contact info and see if they can talk to the contractor directly-maybe the contractor can get their contact info.  The tenant needs to be contacted anyhow for visits, so why not let the tenant and contractor deal directly with each other?  It saves the PM (and everyone) time.

Joshua Adlam · Answer

Honestly speaking as a property manager myself in my opinion it is a cheap move. I believe this is the difference in working with property managers who understand real estate investing and the investors mindset vs those who don't. For the future reference I'd find a property manager who actually invest in deals of their own and will go the extra mile for you with no hesitation. For any property they manage for you leaving a lock box or letting someone in should not be an extra charge whatsoever

Julie Hartman · Answer

Account Closed I think there needs to be more information for context on what you are doing at your property. I can only give you the perspective for the company I work for. Our management agreement stipulates that for major work being done at a property, we do charge 10% of the total. We do this for a number of reasons, first, our scope of work does not include being a general contractor. If we have to meet with a vendor for a couple of bids, we will do that with no extra charge. However, if it gets to be that we are meeting multiple contractors and having to stick around at a property all day for several days waiting for contractors (who often are late or don't show), that eats up a lot of time that isn't being accounted for in the normal fee. Second, if we are having to manage a big project with many different tradesman, we are not construction managers; that's outside of our expertise. However, setting a lockbox or taking pictures of a water heater are things your PM should do as part of management duties so charging extra for that is a bit strange. Some PM's may include general contracting as part of their service so they would have a different take on this. I hope that helps.

Account Closed · Answer

@Steve Maginnis I understand the need to charge for work and am certainly fine with that. I do freelance work myself and know all the time that can add up. My biggest frustration is the inefficiency & carelessness of it all, which you’ve alluded to.

I don’t have any way to ask the tenants to take photos of the water heater so email PM for help. Sure, I could be more clear with my PM but I think this is basic.

Current Situation:

Tenant raises flag about lack of heat -> PM immediately sends someone out to fix the issue for $90

Ideal Situation:

Tenant raises flag about lack of heat -> PM has them change batteries first, then sends out technician.

Account Closed · Answer

@Julie Hartman I am managing the projects. I needed photos of the water heater to share with the contractor. They had to send a “technician” out because they can’t get away from their desk to do all those types of tasks. The bill was $45 and I wasn’t told it would cost $45 ahead of time.

I found the contractor and scheduled the installation/replacement myself. All I need is to make sure they can get into the basement and have asked PM to help. They’re saying they’ll do it for free this time but normally have to send a technician which is minimum $45.

Alternatively, I could have the contractor go to their office to get the key and then subsequently  return it.

At the beginning of winter, I was charged $90 for a technician to replace the batteries in a thermostat. Not sure how that qualified for 2 billable hours

Matthew Irish-Jones · Answer

@Bret Habura. All the things you are asking for

Cost money.  Every little task takes time from the office to take your request, schedule the appointment, arrange the keys and then send a tech out to let the contractor in.  As well as communicate with the contractor.

If it costs the PM company money they have to have a billing line item.

How many accounts do you have with this PM?

Add up your rent collection fees.  Some places rent for $900.  That’s $90 a month to the PM for managing, that is not a lot of revenue.  Most PM’s cannot afford to have techs in the field doing work for free.

Cheap PM - Should I Fire Them?

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